How employers can maximise value from their private medical scheme

Private medical insurance (PMI) has been a key employee benefit for many years, but given the workplace health crisis impacting the UK and the issues with accessing quick treatment through the NHS, it has become increasingly popular.

The UK's workplace health crisis is costing the economy £138 billion annually, with a record number of people out of work due to long-term illness. This means that offering good private medical cover is more beneficial to both employers and employees than ever before, as it’s clear that a healthier workforce is a more productive workforce. 

By keeping up to date with the latest PMI trends and regularly evaluating their scheme options, employers can reduce costs and offer better benefits for their employees. This helps build a healthier, happier, and more engaged workforce, ultimately boosting productivity and driving better results.

Current trends in private medical insurance

Increased mental health support

As mental health issues continue to rise, particularly amongst young people, employers are facing more and more challenges with addressing this. One of the most significant trends is the increased need for comprehensive cover for mental health - in our recent Benefit trends for 2025 research we conducted in partnership with Reward & Employee Benefits Association (REBA), we found that 95% of employers are prioritising mental health investment. This will typically include access to therapists, counsellors, and psychiatrists who can help support employee wellbeing and productivity and reduce absenteeism. 

Introducing neurodiversity support

Likewise, there is a drive to introduce neurodiversity support. However, it is important to be clear that neurodiversity does not refer to mental health conditions, and that neurodivergent employees do not necessarily have poor mental health. 

Introducing digital health solutions

Another key feature that employees increasingly value is the introduction of digital health solutions. Many PMI providers now offer access to digital tools and technologies such as virtual GP consultations, online health assessments, and mobile apps for managing health conditions. Taking advantage of these solutions offers employees convenience and better access to support. 

How employers can address rising healthcare costs 

In addition to the above trends, employers need to consider the impact of rising healthcare costs. PMI premiums have been increasing in recent years, driven by factors such as inflation, ageing populations, and advancements in medical technology.

Embrace innovation

To mitigate rising costs and more effectively manage the performance of schemes, employers may need to explore more innovative strategies, such as self-insured models or partnerships with healthcare providers. Employers can reduce claims under a PMI scheme by offering standalone services, such as musculoskeletal (MSK) and cancer support. These services deliver targeted care whilst helping to control claims, ensuring future premiums are more manageable and maintaining the cost-effectiveness of the schemes.

Conduct data-driven claims fund analysis 

It is also important to challenge the assumptions behind a provider's claims fund calculations. At Barnett Waddingham (BW), we utilise actuarial analysis to review claims experience, the membership profile, and scheme design to provide more accurate models. This approach can lead to significant savings — some of our clients have achieved savings of approximately 15% or more in 2024, without compromising future sustainability compared to insurers' initial renewal rates. Conversely, our analysis can confirm whether the insurer’s proposed funding levels are set correctly. 

Considerations for reviewing your PMI scheme

It’s vital to conduct regular reviews of your existing PMI scheme on an annual basis. When selecting a PMI provider or evaluating an existing one, employers should consider:

• Their level of cover: Is the right level of cover being provided and does it meet the needs of employees, considering factors such as employee demographics and any known health needs?
• Cost-effectiveness: Does the scheme structure meet the current needs of employees and the ability of the employer to fund cover? Following an analysis of claims experience and trends is there a need to restrict any aspects of cover, say, outpatient cover levels or introduce a policy excess to help manage costs?
• Value-added benefits: Does the provider offer any additional benefits which come at no extra cost, for example wellness programs or pathways, fitness discounts, and health screening services? While these can be promoted to help improve employee health and wellbeing, it is worth checking to ensure there is no duplication of services which may be offered via other employee benefits.
• Network of providers: While a strong network of hospitals, clinics, and specialists is essential to ensure that employees have access to high quality care, should the network be restricted to help manage costs?
• Customer service: Often overlooked, particularly when cost is the main driver, but good customer service is key for making sure employees have a positive experience should they need to make a claim. Good customer service needs to be a deliverable when putting in place a new or reviewing an existing scheme.